PBoC releases more liquidity into banks
(24 August 2015 – China) The People’s Bank of China (PBoC) provided even more liquidity providing RMB110 billion (A$23.11 billion) to 14 lenders on 19 August.
The six-month Medium-term Lending Facility from the central bank to the commercial lenders was priced at 3.35 percent, according to the PBoC official Weibo account,
Recipients were not specified.
The PBoC uses such injections to keep liquidity ample as the government tries to underpin a faltering stock market and drains funds from the banking system to support the yuan.
The Shanghai Composite Index reversed a plunge of as much as 5.1 percent to close up 1.23 percent.
China allowed its currency to fall the most in two decades in mid-August and is expected to spend US$40 billion (A$54.3 billion) of its foreign-exchange reserves a month to keep the currency from sliding further.
As the PBoC defends the yuan, it must buy the currency in the market, draining liquidity.
The PBoC pumped RMB120 billion into the financial system on 18 August through the biggest offering of seven-day reverse-repurchase agreements since January 2014.
In July the central bank provided RMB250 billion of MLF loans to banks in July, and total outstanding MLF credit was RMB380 billion at the end of July, according to PBoC data.
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